Published by Appellate Law 360, Class Action Law360, Consumer Protection Law360, Life Sciences Law360, and Product Liability Law360 on November 12, 2015. Invitation To Clarify How Plaintiffs Prove Class Membership --By David Kouba, Arnold & Porter LLP Law360, New York (November 12, 2015, 4:20 PM ET) --In recent years, a growing number of federal courts at both the circuit and district level have considered what plaintiffs must demonstrate at the class certification stage to show that claimants will later be able to establish their membership in the proposed class. These decisions fall into two, sharply divided groups: those that only require an objective definition, and those that also require an administratively feasible way to determine who meets that definition. On Oct. 26, 2015, the defendant in one of these cases Mullins v. Direct Digital LLC asked the U.S. Supreme Court to grant review to decide which standard applies. If the court says yes and there are compelling reasons it might it should follow the second approach and require an administratively feasible way to determine class membership. This approach is both required by the court s recent decisions and due process and consistent with the trial court s obligation to undertake a rigorous analysis at the class certification stage. Carrera and the Requirement of Administrative Feasibility Courts have long recognized that there must be a way to determine who is in a class action, i.e., that class membership is ascertainable. Courts also have frequently recognized that certification should be denied when the question of class membership raises inherently individual issues. In 2013, the Third Circuit concluded in Carrera v. Bayer Corp. a decision that since has been cited frequently by courts and commentators that a class of multivitamin purchasers was not ascertainable and thus could not be certified. The court explained that ascertainability requires an objective class definition (such as the residents of a state who purchased a product during a certain year) and an administratively feasible way to determine who satisfies that definition (such as receipts or purchase records). The court then reasoned that the plaintiffs could not meet these requirements because they had no objective proofs of purchase, and the use of affidavits to prove class membership would deprive the defendant of its right to cross-examine claimants: [a] defendant has a similar, if not the same, due process right to challenge the proof used to demonstrate class membership as it does to challenge the elements of a plaintiff s claim. The court further recognized that a defendant has an interest in ensuring it pays only legitimate claims to avoid the risk that somebody later challenges the judgment by arguing that fraudulent or inaccurate claims materially reduce[d] true class members relief. [1] Since Carrera, other circuits have imposed similar requirements. The Eleventh Circuit, for example, expressly relied upon Carrera in Karhu v. Vital Pharmaceuticals Inc. when holding that a class of dietary supplement purchasers could not be certified. The court explained that plaintiffs cannot satisfy the ascertainability requirement by proposing that class members selfidentify, such as with sworn affidavits, without first establishing that self-identification would be administratively feasible and not otherwise problematic. When doing so, the court also rejected the plaintiff s argument that defendants have no due-process right against unverified selfidentification when total liability will be established at trial, and will not change depending on the number of claims actually made. [2]
Two other circuits have likewise recognized recently, without expressly relying on Carrera, that ascertainability requires that questions of class membership be administratively feasible. In EQT Production Co. v. Adair, the Fourth Circuit concluded that owners of subsurface gas rights could not proceed as a class action to recover unpaid royalties, because former and current owners of gas estates could not be identified without individual inquiries. As the court explained, ascertainability requires that the trial court give greater consideration to the administrative challenges it will face when determining class membership and assess whether any trial management tools are available to ease this process. [3] Likewise, in Brecher v. Republic of Argentina, the Second Circuit explained that ascertainability turns on whether a class is sufficiently definite so that it is administratively feasible for the court to determine whether a particular individual is a member, and held that a class comprised of the holders of beneficial interests in certain bonds did not meet this requirement because they could not be identified without individual mini-trials.[4] In addition, district courts across the country have repeatedly denied certification on ascertainability grounds after concluding that it would not be administratively feasible to determine class membership.[5] As in Carrera, these courts have recognized that due process guarantees defendants an opportunity to challenge each claimant s membership in the class. The Sixth and Seventh Circuits Reject the Carrera Approach Not every court has embraced the reasoning of Carrera or required that class membership be administratively feasible. To the contrary, two circuit courts and a handful of district courts have expressly declined to impose this requirement.[6] Last summer, the Seventh Circuit concluded that a trial court had not erred when certifying a class of dietary supplement purchasers, even though there were no objective records that identified every class member. The court explained that a class must be defined clearly and that membership be defined by objective criteria, but went on to hold that it was not necessary to demonstrate administrative feasibility. As the court reasoned, [n]othing in Rule 23 mentions or implies this heightened requirement under Rule 23(b)(3), and a heightened ascertainability requirement would have the effect of barring class actions where class treatment is often most needed: in cases involving relatively low-cost goods or services, where consumers are unlikely to have documentary proof of purchase. [7] One month later, the Sixth Circuit relied upon Mullins when affirming class certification for a class of probiotic purchasers. The court explained that class certification did not require that plaintiffs demonstrate at the certification stage how they would establish class membership and further reasoned that the approach in Carrera would undermine the very purpose of class action remedies by making certification more difficult. The court also concluded that, even though class membership would turn upon a substantial review of internal data from defendant, this review could be supplemented through the use of receipts, affidavits, and a special master to review individual claims. [8] Ascertainability Reaches the Supreme Court in Mullins The division in how courts have addressed ascertainability and administrative feasibility recently reached the steps of the U.S. Supreme Court when the defendant in Mullins asked the court to review the Seventh Circuit s decision. There are good reasons why the court might grant that request.
First, as discussed above, there is a sharp divide between the approach taken by the Second, Third, Fourth and Eleventh Circuits and numerous district courts and the approach taken by the Sixth and Seventh Circuits and other district courts. Second, there is a compelling need to provide guidance to the lower courts on this issue. Ascertainability is a recurring question that will continue to arise frequently in class actions. In fact, the issue is currently before the Ninth Circuit.[9] Third, the court has shown an increased interest in class certification over the last few years, including its landmark decisions in Comcast Corp. v. Behrend[10] and Wal-Mart Stores Inc. v. Dukes[11] and more recent cases still pending before the court.[12] The Court s Recent Decisions, Rule 23 and Due Process Require a Heightened Ascertainability Standard If and when the court addresses ascertainability whether that be in Mullins or a subsequent case such as Jones it should adopt the approach described in Carrera and require that plaintiffs demonstrate at the class certification stage that it will be administratively feasible to determine who falls within the class definition. Despite its detractors, the principles underlying this approach are neither controversial nor complicated to the contrary, they are found in the Supreme Court s class certification jurisprudence, the text of federal Rule 23 and long-standing principles of due process. The court recently confirmed that a class action is an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only, [13] and therefore Rule 23 imposes stringent requirements for certification that in practice exclude most claims. [14] Trial courts thus must undertake a rigorous analysis at the certification stage and cannot certify a class unless plaintiffs offer evidentiary proof that affirmatively demonstrate[s] the requirements of Rule 23(b)(3) are satisfied.[15] As part of this analysis, courts must determine whether plaintiffs have demonstrated that a class action would be superior to other available methods for fairly and efficiently adjudicating the controversy, including the likely difficulties in managing a class action, and whether common issues predominate over issues that are specific to each class member.[16] There can be little dispute that these requirements are difficult to establish when the threshold question of who is even in the class would necessitate individual mini-trials. Supreme Court authority also supports the conclusion in Carrera that defendants have a due process right to challenge each individual s class membership. Rule 23 is grounded in due process, [17] and requires that there be an opportunity to present every available defense [18] and confront and cross-examine adverse witnesses. [19] In addition, under the Rules Enabling Act, courts cannot use Rule 23 in a way that would abridge, enlarge or modify any substantive right. [20] Any proposition that parties can submit unchallenged affidavits to establish claims and recover money is a direct affront to these principles. Furthermore, defendants have a right to ensure that fraudulent claims do not dilute the amount of funds available to true class members and jeopardize a judgment s finality. Moreover, the mere fact that requiring administrative feasibility might, in some instances, make certification harder to obtain does not warrant a relaxing those standards. To the contrary, the principles that require proof of class membership are not mere guidelines that can be eliminated. The requirement of administrative feasibility, however, does not make class actions obsolete, as some critics of Carrera have suggested. To the contrary, in many cases, there will
be objective records available to determine class membership. Indeed, even after Carrera, the Third Circuit concluded in Byrd v. Aaron s Inc. that, under the facts of that case, there was a reliable and administratively feasible method for assessing class membership.[21] * * * There is no way to forecast the Supreme Court s response to the Mullins petition with complete accuracy. But if he court chooses to use this opportunity address the ascertainability, it should require that plaintiffs demonstrate, as a prerequisite to class certification, that it will be administratively feasible to determine who satisfies the class definition. David Kouba is a counsel in Arnold & Porter's Washington, D.C., office. The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice. [1] Carrera v. Bayer Corp., 727 F.3d 300 (3d Cir. 2013). [2] Karhu v. Vital Pharmaceuticals, Inc., -- F. App x --, 2015 WL 3560722 (11th Cir. June 9, 2015). [3] EQT Production Co. v. Adair, 764 F.3d 347 (4th Cir. 2014). [4] Brecher v. Republic of Argentina, 802 F.3d 303 (2d Cir. 2015). [5] See, e.g., In re Clorox Consumer Litigation, 2014 WL 3728469 (N.D. Cal. July 28, 2014); Warnick v. Dish Network LLC, 2014 WL 2922660, *4 (D. Colo. Jun 27, 2014). [6] See, e.g., Rikos v. Proctor & Gamble Co., 799 F.3d 497 (6th Cir. 2015); Mullins v. Direct Digital LLC, 795 F.3d 654 (7th Cir. 2015); McCrary v. Elations Co., LLC, 2014 WL 1779243, at *8 (C.D. Cal. Jan. 13, 2014); Nieberding v. Barrette Outdoor Living, Inc., 2014 WL 4408928, *4 (D. Kan. Sept. 08, 2014). [7] Mullins, 2015 WL 4546159. [8] Rikos, 799 F.3d 497. [9] Jones v. ConAgra Foods Inc., Case No. 14-16327 (9th Cir.). [10] 133 S. Ct. 1426 (2013). [11] 131 S. Ct. 2541 (2011). [12] See, e.g., Tyson Foods, Inc. v. Bouaphakeo, No. 14-1146 (U.S.). [13] Comcast, 133 S. Ct. at 1432 (citation and quotation omitted). [14] Am. Express Co. v. Italian Colors Rest., Inc., 133 S. Ct. 2304, 2310 (2013).
[15] Comcast, 133 S. Ct. at 1432-33. [16] Fed. R. Civ. P. 23(b)(3). [17] Taylor v. Sturgell, 553 U.S. 880, 901 (2008). [18] Lindsey v. Normet, 405 U.S. 56, 66 (1972). [19] Goldberg v. Kelly, 397 U.S. 254 (1970). [20] 28 U.S.C. 2072(b); see also, e.g., Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 130 S. Ct. 1431, 1443 (2010). [21] Byrd v. Aaron s Inc., 784 F.3d 154 (3d Cir. 2015